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Sat, 8 August 2020

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The House Live All
Coronavirus
Coronavirus
Coronavirus
By Dods Monitoring
Coronavirus
Press releases

UK economy shrinks by a fifth as coronavirus lockdown toll revealed

UK economy shrinks by a fifth as coronavirus lockdown toll revealed

The ONS said all the main sectors of the economy had seen a fall over the three-month period. (Image: PA)

3 min read

The British economy shrank by almost a fifth between March and May as the country went into coronavirus lockdown, stark new figures reveal.

The latest data from the Office for National Statistics show a sharp, 19.1% contraction in GDP took place in the three months to May amid sweeping government restrictions on movement.

The figures dwarf the impact of the 2008 financial crisis, where GDP shrunk by no more than 2.1% in any single quarter.

Economic growth returned with a slight 1.8% uplift in May, the data show.

The ONS said: “This release captures the direct effects of the coronavirus (COVID-19) pandemic and the government measures taken to reduce transmission of the virus.

“The most significant was the introduction of restrictions in movement across the UK, which began on 23 March 2020.”

The ONS said all the main sectors of the economy had seen a fall over the three-month period, with accommodation and food services worst-hit by a 71.7% contraction.

GDP in the construction sector shrank by 29.8%, while manufacturing suffered an 18% contraction.

While there were some signs of an economic recovery in May, with GDP growing by 1.8%, the ONS said the level of output did “not recover from the record falls seen in March and April 2020 and has reduced by 24.5% compared with February 2020, before the full impact of the coronavirus”.

Jonathan Athow, the ONS’s deputy national statistician for economic statistics, said: "Manufacturing and house building showed signs of recovery as some businesses saw staff return to work.

"Despite this, the economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck.

"In the important services sector, we saw some pickup in retail, which saw record online sales. However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines."

In response Labour's shadow Chancellor Anneliese Dodds said: “While it is encouraging to see that the economy started to slowly grow back in May, these figures show the scale of the challenge ahead of us.

“Labour pushed the government to do more protect and create jobs. While we have concerns around the implementation of the Kickstart scheme, we are pleased to have seen some action in this area.

"But ministers must do much more to prevent people becoming unemployed in the first place, such as a flexible Job Retention Scheme for badly-hit sectors and areas affected by additional lockdowns.

“Above all, the government must focus on getting the Test, Track and Isolate system working properly, which is vital to help build consumer confidence.”

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Coronavirus Economy
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